Boston Scientific (BSX) Sell-Off Appears Unwarranted -Piper Jaffray

Piper Jaffray lowers its price target on Boston Scientific (NYSE: BSX) from $16 to $13 but maintain its Buy rating, saying yesterday's 10% sell-off on unusually heavy volume gives investors a buying opportunity.

The firm notes that while there was no new news, the decline in Boston Scientific could be attributed to "the culmination of recent events that prompted holders to exit their positions." Piper believes that:

• Boston Scientific has the ability to pay the $700 million in damages from Johnson & Johnson's (NYSE: JNJ) patent infringement case. Although Piper does not believe Boston Scientific's appeals will be passed, the firm seems confident that the company won't have trouble paying the damages given its large cash position.
  
• the company has an acceptable amount of liquidity on hand. Investors may have recently been concerned as Boston Scientific significantly levered its balance sheet in order to accommodate the acquisition of Guidant, but Piper notes that the company has "aggressively paid down its debt..."
  
• the US launch of Promus will be better than expected
  
• Promus will account for more than half of Boston Scientific's US DES sales mix in Q3, which compares to its original estimate of only 20%.

Despite the positive note, Piper cut its FY08 and FY09 sales estimates from $8.13 billion and $8.32 billion to $8.05 billion and $8.27 billion, respectively. The Street is expecting FY08 sales of $8.11 billion and FY09 sales of $8.34 billion. The firm kept its FY08 EPS estimate at $0.83, but lowered its FY09 EPS estimate from $0.90 to $0.88. The Street sees Boston Scientific reporting FY08 EPS of $0.55 and FY09 EPS of $0.64.

Shares of Boston Scientific are currently down 4.5% to $8.55.

Boston Scientific Corporation engages in the development, manufacture, and marketing of medical devices that are used in various interventional medical specialties worldwide.

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